BUS685

Chapter 9: International
Competitive Strategy

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1. Why Do Managers Need to
Formulate Competitive Strategy?
 Scare resource
 Competition
 Uncertainty and risks

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2. What is International Strategy
and Why Is It Important?
 International Strategy refers to the way
firms make fundamental choice about
developing and deploying scarce resources
internationally.
 It is about which products and services to
offer. It is about choosing between
alternative product lines.
 It deals with all various functions and
activities of a company, not just production
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and marketing.
2. What is International Strategy
and Why Is It Important?
 Goal of international strategy is
competitive advantage: unique and valuable
or advantageous position in relation to
competitors.
 Competitive advantage depends on Core
Competencies. Core competencies are
skills,, capacity and techniques that define
the unique niche of the company.
International companies can create and
retain core competencies if they create 4
2. What is International Strategy
and Why Is It Important?
 values which (a) the customers are willing to pay
for; (b) are rare , since competencies shared with
competitors cannot be a basis for competitive
advantage; (c ) are difficult to imitate or substitute
for; and (d) are organized in a way that the
company can fully exploit and capture value from
the competitive potential of these valuable, rare
and difficult-to-imitate competencies.
 Core competencies of Walmart?

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2. Why Plan Globally?
 Five factors explain why firms plan globally:
-Firstly: complex, rapidly changing uncontrollable
forces – formal global planning enables top
management to identify challenges and
opportunities and formulate strategy to address
them;
 Secondly, key decision makers gain common
understanding of external environment, business,
strategy and assumptions behind the strategy;
 Thirdly, formal global planning enables decision
makers to consider ramifications of their actions; 6
2. Why Plan Globally?
 Fourthly, provides a systematic basis of
raising key questions regarding mission,
vision and values of the company and
resources, challenges and opportunities;
 Fifthly, helps innovation and R & D;
 Finally, even if a company is domestic,
global planning is advisable, because global
environmental forces impact even on
domestic operations.
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3. Global Strategic Planning
Process
 The process of strategic planning provides a
formal structure in which the managers:
i. analyse company’s external environments;
ii. analyse company’s internal environments;
iii. define company’s mission, vision and values;
iv. set corporate objectives;
v. quantify corporate objectives;
vi. formulate competitive strategies;
vii. make tactical planning 8
4. Elaboration of the Steps in
Strategic Planning
 4.1 Analysis of Uncontrollable
Environments – domestic, foreign and
international
- how is it done and what is the
outcome?
 4.2 Analysis of Controllable Variables
- Value chain analysis [Diagram]
-Use of knowledge as a corporate
resources 9
4. Elaboration of the Steps in
Strategic Planning
 4.3 Define corporate mission, vision and
value statements: These broad statements
communicate to the stakeholders important
characteristics of the company
- Concepts and examples from the
book
 4.4 Set corporate objectives : Objectives direct the
firm’s course of action, maintain it within the
boundaries of mission, vision and values it
upholds. 10
4. Elaboration of the Steps in
Strategic Planning
 4.5 Quantification of the objectives:
Objectives cannot be attained without their
precision, and quantification
- examples
 4.6 Formulation of competitive strategies:
 Alternative competitive strategies under
opposing pressures:
-pressure for customization and
-pressure for cost reduction 11
5. Formulation of Competitive
Strategies
 i. Home Replication Strategy
 ii. Multidomestic Strategy
 iii. Global Strategy
 iv. Transnational Strategy
 v. Regional Strategy
- semi-multi-domestic Regional
-semi-global Regional
 Mark, there are five, not four competitive
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strategies. Follow diagram on board .
HIGH

Cost Reduction pressure

LOW Customization Pressure HIGH

Competitive Strategy